In re Tutu Wells Contamination Litig.

The court holds that summary judgment cannot be granted on the issue of corporate officers' Comprehensive Environmental, Response, Compensation, and Liability Act (CERCLA) liability, but a successor corporation may be held liable under CERCLA. After a U.S. Virgin Islands clothing manufacturer dissolved and a successor corporation assumed its assets, aquifer contamination was discovered near the corporation's facility. The U.S. Environmental Protection Agency (EPA) ordered several parties to remediate the site. These parties assumed the role of third-party plaintiffs and filed third-party complaints against the initial corporation, its corporate officers, the successor corporation, the financiers of the asset distribution, and a contingent liability trust created during the asset distribution.

The court first holds that the voluntary dismissal of the third-party plaintiffs' CERCLA contribution and cost recovery claims against the financiers did not sufficiently prejudice the financiers so that an award of costs was warranted. The court next holds it will convert the clothing manufacturers' motion to dismiss the third-party plaintiffs' CERCLA contribution action to a summary judgment motion because the third-party plaintiffs had adequate notice that such a conversion might occur. The court then holds that the third-party plaintiffs are barred from proceeding against the third-party defendants under Resource Conservation and Recovery Act (RCRA) § 7002. RCRA § 7002(b)(1)(B)(iv) bars commencement of an action when EPA issues a CERCLA § 106 administrative order or when a responsible party is conducting a removal action pursuant to a CERCLA § 106 administrative order. EPA issued a CERCLA § 106 order against three of the third-party plaintiffs. In addition, the court holds that New Castle County v. Halliburton Nus Corp., 27 ELR 21159 (3d Cir. 1997), does not, based on the facts in the case at bar, compel a dismissal of the third-party plaintiffs' CERCLA § 107(a) claims or limit the parties to CERCLA § 113 contribution claims. While the third-party plaintiffs were named as potentially responsible parties by EPA, they are still innocent parties for CERCLA purposes.

The court next holds that the Third Circuit's prior opinion in the instant litigation did not reach the corporate officers' personal liability, because it had neither the issue of the officers' liability nor the officers in their personal capacities before it. Further, the Third Circuit has provided for the possibility that former corporate officers can be sued separate and apart from their corporate status. Therefore, summary judgment dismissing the third-party plaintiffs' claims against the officers cannot be granted. The court then holds that the officers, as initial shareholders of the clothing manufacturer, cannot be held liable as CERCLA § 107 owners. The officers could not have owned the facility at any time during disposal of hazardous chemicals in the common and business understanding of the term "owned." In addition, although the officers owned the facility when chemicals from a pipe seeped into the ground, the passive migration of hazardous waste cannot suffice for owner liability under CERCLA § 107(a)(2). The court next holds that, based on the inconsistencies in the record regarding the contamination, holding the officers individually liable as CERCLA § 107 operators would be improvident and, therefore, summary judgment on the issue cannot be granted to either party. The court also holds that summary judgment cannot be granted on the issue of the officers' liability as CERCLA § 107(a)(3) arrangers. At a minimum, knowledge of the waste disposal arrangement must be alleged in order to trigger "arranger" liability, but the parties' motions have neither pled nor briefed the issue well.

Next, the court holds that under Delaware law, the successor to the initial clothing manufacturer may be held liable for the initial corporation's CERCLA liability even though CERCLA was not enacted until after the initial corporation's asset distribution. An agreement entered into prior to the passage of CERCLA can allocate CERCLA liabilities if it is specific enough to include CERCLA liability or general enough to include any and all environmental liability. And the proxy statement regarding the dissolution of the initial corporation speaks generally of any and all liabilities which may arise during or after the liquidation period. Last, the court dismisses the third-party plaintiffs' claims against the contingent liability trust. The court had jurisdiction over the contingent liability trust, but the trust no longer exists. A successor trust exists, but the successor trust is not named in the action, and, therefore, the court does not have jurisdiction over it.